2009 U.S. PWC Sales Continue Downward Spiral

Publish Date:

Nov 4, 2009

By Matthew Camp

Editor’s note: Power Products Marketing is a Minneapolis research firm that has been tracking the PWC market for 10 years. This report was prepared by Matthew Camp, a powersports analyst with the firm.

THE ECONOMY shows few signs of recovering, and consequently all powersports markets are suffering, to varying degrees. The PWC market has continued its downward trend, with sales estimated to have been down 30 percent at season-end, and the near future doesn’t look much better.

When we wrote our May year-to-date PWC retail sales (click here to read it) report we indicated that sales were down 30 percent compared to the same period for 2008, and that the market was unlikely to break 50,000 units. Now that the 2009 season has ended it appears that the market remained on its disappointing trajectory and, again, was 30 percent off the 2008 season-end figure at just over 49,000 units sold. The market has now fallen around 45 percent from its height of 88,000 in 2006. The credit markets have not improved as far as consumers are concerned, and job insecurity and dwindling investments and nest-eggs are all playing their part in curbing consumer demand for PWC among other powersports products.

Our research indicates that little has changed since May with regard to the regional sales picture. California and Florida continued to be the most affected among the most important watercraft states, with only Texas performing slightly better than expected. The generally weak demand for PWC has had a significant effect on dealer levels, with some estimates of up to 15 percent of dealers either exiting the market or being culled by the OEMs. And this is before considering the future of Honda’s PWC dealers, which we’ll cover later in this report.

Three-Passenger PWC Still Most Popular
According to our estimates, three-passenger PWC continued to dominate the overall PWC market in 2009 with over 87 percent of sales in this configuration, slightly up from 2008. Four-stroke models and those with fuel injection comprise the majority of the market.

Models with MSRPs less than $9,000 continue to sell well, currently comprising over 38 percent of the market, up a few points from the previous year. Historically, sales of more expensive units are usually more resilient to market downturns, but it appears in the current recession the value-priced units, which Yamaha in particular has been focusing on, are slightly more recession-proof than See-Doo’s more expensive performance machines.

From surveys Power Products Marketing has conducted it appears that the older buyers, those in their 50s, who form the mainstay of the PWC consumer base, have been down-scaling their purchasing habits. They still want a three-seater, but they don’t necessarily see the need for a GPS and all the bells and whistles when a value-priced unit will do. It appears that this development has played a large part in allowing Yamaha to close the gap on See-Doo, and they are now neck-to-neck in terms of market share. Kawasaki also appears to be weathering the economic storm slightly better than its competitors as its sales continued to decline at a slower rate, although much of its sales appeared to be noncurrent units.

Inventory Issues Worsen
At the end of the 2008 season most manufacturers appeared to have significant inventory issues, but by May reports were that levels had been considerably improved. At season-end it appears that lackluster sales through the summer reversed the spring trend, and inventory has backed up again for many OEMs, although not on a scale of 2008. It seems that there is at least four months' worth of inventory on hand, excluding Honda’s inventory. (Continued)